- Home
- A-Z Publications
- Annual Review of Resource Economics
- Previous Issues
- Volume 13, 2021
Annual Review of Resource Economics - Volume 13, 2021
Volume 13, 2021
-
-
Recent Advances in Empirical Land-Use Modeling
Vol. 13 (2021), pp. 1–15More LessData sets providing repeated observations of land use at fine spatial scales have enabled a new generation of land-use studies. In the past decade, these analyses have put increasing emphasis on empirical research designs that provide more convincing causal estimates. I review the use of instrumental variables, matching, difference-in-differences, regression discontinuity design, and randomized controlled trials in the recent land-use economics literature, exploring how new data have made possible the use of these research designs. I show that these estimators have produced different results than were obtained with traditional approaches and have provided new insights into important land-use policy issues such as additionality and spillover effects.
-
-
-
The Capitalization of Agricultural Subsidies into Land Prices
Vol. 13 (2021), pp. 17–38More LessWe review the recent theoretical and empirical literature on the capitalization of agricultural subsidies into land prices. The theoretical literature predicts that agricultural subsidies are capitalized into land prices when land supply is inelastic and land markets function well. The share of capitalized subsidies significantly depends on the implementation of farm subsidies, local land-market institutions, rural market imperfections, and spatial effects. Most empirical studies have shown that agricultural subsidies are only partially capitalized into land prices, estimating that decoupled payments and land-based subsidies exhibit higher capitalization than coupled payments and nonland-based subsidies, respectively. However, estimated capitalization rates vary widely across studies largely because of data availability and identification challenges.
-
-
-
Agricultural Labor Supply
Vol. 13 (2021), pp. 39–64More LessThe labor supply response to agricultural wages is critical to the viability of crop production in high-income countries, which hire a largely foreign farm work force, as well as in low-income countries, where domestic workers move off the farm as the agricultural transformation unfolds. Modeling agricultural labor supply is more challenging than modeling the supply of other agricultural inputs or of labor to other sectors of the economy owing to unique features of agricultural production and farm labor markets. Data and econometric challenges abound, and estimates of agricultural labor supply elasticities are sparse. This review explains the importance and challenges of modeling farm labor supply and describes researchers’ efforts to address these challenges. It summarizes estimates of agricultural labor supply elasticities over the last 80 years, provides insights into variation in these estimates, identifies priority areas for future research, and reviews the most influential empirical work related to this important topic.
-
-
-
Price Transmission in Agricultural Markets
Vol. 13 (2021), pp. 65–84More LessWe review recent developments in the analysis of price transmission in agricultural markets. Markets may be separated in time, form, and space (as well as in combinations of such factors). Transactions and storage costs as well as production and marketing factors delineate these markets. We show that much of the research on spatial market linkages has reflected methodological advances that have led to increasingly nonlinear time-series models. Advances in the theoretical and empirical literature over the last few decades have demonstrated that price relationships in the food chain are highly context specific. Improvements in marketing, information, and transportation technology have strengthened the links between prices in the food system, but at the same time links in the food chain are increasingly subject to vertical coordination and, thus, less visible to outside observers, including researchers.
-
-
-
A Line in Space: Pricing, Location, and Market Power in Agricultural Product Markets
Vol. 13 (2021), pp. 85–107More LessAgricultural economists have a long history of emphasizing and analyzing the spatial dimension of agricultural and food markets. Despite a rich body of literature and important contributions to agricultural and spatial economics, one aspect is frequently disregarded: the oligopsonistic nature of agricultural markets due to spatial competition of neighboring buyers of farm products. This review presents the theoretical foundations of spatial pricing, competition, and location in terms of buyer power and discusses concepts that are relevant for agricultural markets. By providing a comprehensive overview of prior work, we highlight the multifaceted areas of applications to agricultural markets. Additionally, we discuss future research avenues for and challenges of the analysis of spatial competition in agricultural economics.
-
-
-
Food Deserts: Myth or Reality?
Vol. 13 (2021), pp. 109–129More LessIn 2010, the White House announced the goal of eradicating food deserts—low-income neighborhoods without nearby supermarkets—in seven years. The efficacy of this initiative is premised on the presumption, mostly untested in 2010, that food deserts significantly contribute to health disparities in low-resourced communities. We synthesize the post-2010 line of research that seeks to establish causality in the relationship between food access and nutrition/health. All things considered, there is so far little evidence that food deserts have a causal effect of meaningful magnitude on health and nutrition disparities. The causes of diet quality disparity lie more on the side of food demand than on supply. Therefore, from the public health perspective, policies that lower the relative price of healthy food or change the “deep parameters” of preferences in favor of healthy food would be more appealing than eliminating food deserts.
-
-
-
Food Systems for Human and Planetary Health: Economic Perspectives and Challenges
Vol. 13 (2021), pp. 131–156More LessFood systems are currently facing unprecedented challenges. More than 690 million people still suffer hunger while climate change, rapid depletion of natural resources, and loss of biodiversity further threaten future food systems. Influential global reports emphasize the need for fundamental transformations of food systems for human and planetary health, but few incorporate economic considerations. This review adopts an economic lens to assessing potential transitions to ideal food systems that are productive, sustainable, nutritious, resilient, and inclusive. Our findings show that new technologies, policies, institutions, and behavior changes can leverage synergies for achieving multiple food system targets, but rigorous economic analysis is needed to further analyze trade-offs and to overcome complex behavioral, institutional, and political barriers. This review also points to important knowledge gaps that economists and other social scientists must address to contribute to the radical transformation of food systems.
-
-
-
From Torrents to Trickles: Irrigation's Future in Africa and Asia
Vol. 13 (2021), pp. 157–176More LessIrrigation has been a key component of agricultural intensification and transformation in Asia and has the potential to take on the same role in Sub-Saharan Africa. Irrigation has contributed to increased food production, lower food prices, higher rural employment, and overall agricultural and economic growth. At the same time, irrigation—through its large consumptive water use—has accelerated water depletion, degradation, and pollution; moreover, it has benefitted richer farmers more than poorer farmers. This article reviews the contributions and challenges of irrigation and identifies a series of measures to increase the sustainability and equity of irrigation going forward.
-
-
-
Information and Communications Technology (ICT) and Agricultural Extension in Developing Countries
Vol. 13 (2021), pp. 177–201More LessWith new possibilities offered by information and communications technology (ICT), an abundance of products, services, and projects has emerged with the promise of revitalizing agricultural extension in developing countries. However, a growing body of evidence suggests that not all ICT-enabled extension approaches are equally effective in improving adoption, productivity, income, or welfare outcomes. In this review, we explore various conceptual and methodological threads in the literature on ICT-enabled extension in developing countries. We examine the role of multiple impact pathways, highlighting how ICTs influence behaviors and preferences,gender and intrahousehold dynamics, spillovers, and public worker incentives. We also explore the opportunities presented by ICT-enabled extension for increasing the methodological rigor with which extension outcomes are identified. These conceptual and methodological insights—coupled with empirical evidence from prior studies—offer direction for several lines of policy-relevant research on ICT-enabled extension.
-
-
-
The Political Economy of the Resource Curse: A Development Perspective
Antonio Savoia, and Kunal SenVol. 13 (2021), pp. 203–223More LessThis article reviews the recent literature on the developmental effects of resource abundance, assessing likely effects and channels with respect to key development outcomes. To date, this area has received less analysis, although it is relevant to the United Nations’ Sustainable Development Goals agenda, as a significant number of the world's poor live in African resource-rich economies. We argue that the presence of a natural resource sector per se does not necessarily translate into worse development outcomes. The natural resource experience varies to a significant extent. Countries with similar levels of resource rents can end up with significantly different achievements in terms of income inequality, poverty, education, and health. The challenge is to explain the different natural resource experiences. A pivotal mechanism behind the developmental effects of the natural resources sector is the type of states and political institutions that resource-abundant economies develop.
-
-
-
Domestic Pressure and International Climate Cooperation
Vol. 13 (2021), pp. 225–243More LessIn the wake of 25 United Nations Climate Change Conferences of the Parties (and counting), international cooperation on mitigating greenhouse gas emissions to avoid substantial and potentially irreversible climate change remains an important challenge. The limited impact of the Kyoto Protocol on curbing emissions, and the gap between the ambitions of its successor and the Paris Agreement's lack of sanctioning mechanisms for addressing noncompliance, demonstrates both the difficulties in negotiating ambitious environmental agreements and the reluctance of countries to comply with their agreed emission targets once they have joined the treaty. Therefore, a better understanding of the obstacles and opportunities that the interactions between domestic and international policy pose for the design of successful international climate cooperation is of utmost importance. To shed light on the roots of the stalemate (and suggest possible ways out), this article reviews and draws lessons from a growing theoretical, experimental, and empirical literature that accounts for the hierarchical interplay between domestic political pressure and international climate policy.
-
-
-
Carbon Taxes in Theory and Practice
Vol. 13 (2021), pp. 245–265More LessAs of 2020, carbon taxes were in effect in 30 jurisdictions around the world. This article provides a theoretical overview of carbon taxes along with some empirical evidence on the macroeconomic impacts of existing taxes, including emission reductions. It compares and contrasts carbon taxes with other policy instruments to reduce emissions. It also highlights issues that have recently attracted the attention of researchers on which additional research would be beneficial. Those include (a) the role of border adjustments in a unilaterally imposed carbon tax, (b) hybrid carbon tax systems that increase the likelihood of hitting desired emission reduction targets, (c) the optimal price path for a carbon tax, and (d) the growing empirical literature on the economic impact of carbon taxes.
-
-
-
Environmental Benefit-Cost Analysis: A Comparative Analysis Between the United States and the United Kingdom
Vol. 13 (2021), pp. 267–288More LessThe United States and United Kingdom have long-standing traditions in the use of environmental benefit-cost analysis (E-BCA). While there are similarities between how E-BCA is utilized, there are significant differences too, many of which mirror ongoing debates and recent developments in the literature on environmental and natural resource economics. We review the use of E-BCA in both countries across three themes: (a) the role of long-term discounting, (b) the estimation and use of carbon valuation, and (c) the estimation and use of the value of a statistical life. In each case, we discuss how academic developments are (and are not) translated into practical use and draw comparative lessons. We find that, in some cases, practical differences in E-BCA can be overstated, although in others these seem more substantive. Advances in the academic frontier also raise the question of when and how to update practical E-BCA, with very different answers across our themes.
-
-
-
Understanding the Improbable: A Survey of Fat Tails in Environmental Economics
Vol. 13 (2021), pp. 289–310More LessWe survey the growing literature on fat-tailed distributions in environmental economics. We then examine the theoretical and statistical properties of such distributions, focusing especially on when these properties are likely to arise in environmental problems. We find that a number of variables are fat tailed in environmental economics, including the climate sensitivity, natural disaster impacts, spread of infectious diseases, and stated willingness to pay. We argue that different fat-tailed distributions arise from common pathways. Finally, we review the literature on the policy implications of fat-tailed distributions and controversies over their interpretation. We conclude that the literature has made great strides in demonstrating when fat tails matter for optimal environmental policy. Yet, much is less well understood, including how alternative policies affect fat-tailed distributions, the optimal policy in a computational economy with many fat-tailed problems, and how to account for imprecision in empirical tests for fat tails.
-
-
-
Economic, Environmental, and Health Impacts of the Fracking Boom
Vol. 13 (2021), pp. 311–334More LessThe shale gas boom revolutionized the energy sector through hydraulic fracturing (fracking). High levels of energy production force communities, states, and nations to consider the externalities and potential risks associated with this unconventional oil and natural gas development (UOGD). In this review, we systematically outline the environmental, economic, and anthropogenic impacts of UOGD, while also considering the diverse methodological approaches to these topics. We summarize the current status and conclusions of the academic literature, in both economic and related fields, while also providing suggested avenues for future research. Causal inference will continue to be important for the evaluation of UOGD costs and benefits. We conclude that current economic, global, and health forces may require researchers to revisit outcomes in the face of a potential shale bust.
-
-
-
Economics of Pollination
Vol. 13 (2021), pp. 335–354More LessMany food crops rely on pollination by animals. Historically, wind and wild organisms provided pollination as an ecosystem service that varied across agroecological zones, cropping systems, and time. The value of these pollination services is likely substantial but has not been estimated reliably. More recently, pollination services in major crop-producing regions have been provided through organized markets, primarily the rental of honey bees. The sustainability of commercially provided pollination services is being challenged by parasites, diseases, pesticide exposures, poor nutrition, and Colony Collapse Disorder. Economic analyses indicate that honey bee rental markets have been able to adjust to those challenges, at least to date. Understanding the future sustainability of rental markets requires greater knowledge of the contributions of wild pollinators, optimal management of pollination services from wild and managed organisms, and the value of pollination services provided by wild and managed organisms.
-
-
-
On the Coevolution of Economic and Ecological Systems
Vol. 13 (2021), pp. 355–377More LessThis review provides a description of common and distinct characteristics of economic and ecological systems; examples of the ways in which these characteristics can be incorporated into models adequately describing the coevolution of the two-component systems to produce a unified ecological-economic system in time, space, and appropriate scale; and a discussion of policy design when the policy maker takes into account this coevolution, along with potential biases when the coevolution is ignored. We propose the development of integrated assessment models of the coevolving systems that will embody the variety of common and distinct characteristics identified in this survey. We expect that such an approach will provide useful insights into the efficient management of coevolving ecological-economic systems.
-
-
-
Agricultural Trade and Environmental Sustainability
Vol. 13 (2021), pp. 379–401More LessGlobal agriculture consumes substantial resources and produces significant pollution. By shifting its production to new locations, and inducing changes in technology and input use, trade has a substantial impact on environmental sustainability of the world's food systems, but due to suboptimal environmental policy, the exact nature of these impacts is in dispute. We review the literature on agricultural trade and environmental sustainability, highlighting the different approaches taken in ecology versus economics. While useful in identifying environmental costs, much of the ecological literature does not compare these costs to a trade-free counterfactual and can therefore be misleading. Further, by moving production to places with more resources and increasing production efficiency, trade can reduce the environmental impact of food production. On the other hand, trade can also limit the effectiveness of domestic environmental policy because production can be shifted to countries with less stringent regulations. However, recently, consumers are leveraging trade policy to induce exporters to improve environmental sustainability. While such policies are gaining traction in wealthy countries, evidence suggests that such measures will not reach their potential without buy-in from decision makers in the countries where the environmental damages are occurring.
-
-
-
Resource Management Under Catastrophic Threats
Yacov Tsur, and Amos ZemelVol. 13 (2021), pp. 403–425More LessWe survey the rapidly growing economic literature on environmental catastrophes and the various approaches developed to address the hovering threats. Various theoretical descriptions of catastrophic occurrences are classified with respect to the uncertain conditions that trigger the events, the postoccurrence dynamic regime, and the form of the inflicted damage. We show that variations in each of these characteristics strongly affect the ensuing optimal response to the threats. The basic setup is then extended in several dimensions, allowing the modeler to consider more realistic formulations of catastrophic scenarios. Recent efforts to incorporate catastrophic events within large-scale numerical schemes to study the global climate change problem are reviewed. The number of publications in this vein increases in tandem with the growing number of disasters reported globally and their scale of damage, reflecting the growing concern that this phenomenon portends environmental collapse.
-